June, 9th – 2023


1. Tax reform advances in Congress with support from the administration

On Tuesday (June 6), after four months of discussions, tax reform rapporteur Aguinaldo Ribeiro (PP-PB) submitted a proposal for tax reform to representatives in Congress. The document will help members of Congress write the bill, which is expected to be voted on in the first week of July.

The proposal would merge five different taxes into one dual value-added tax, to be charged by the federal government and local governments on consumption goods. The new tax, called the Tax on Goods and Services (IBS), will combine federal taxes IPI, PIS and COFINS with state tax ICMS and city tax ISS.

Estadão: Relator apresenta diretrizes da reforma tributária; veja os principais pontos da proposta
Folha: Nova proposta de reforma tributária é positiva, mas terá resistência, dizem especialistas
UOL: Reforma tributária prevê junção de impostos e fundo com recursos da União

2. Official inflation rate for May is 0.23%

According to the Brazilian Institute of Geography and Statistics (IBGE), the Extended National Consumer Price Index (IPCA) – the official inflation rate for Brazil – continued to show signs of slowing down, closing out May at 0.23%. The rate was below market analysts’ predictions of 0.33% inflation in May and a 4.04% inflation rate for the year.

The IPCA stands at 2.95% for 2023 to date, while 12-month inflation is 3.94%. In May 2022, the inflation rate was 0.47%. Inflation has been slowing since April, when it peaked at 12.13%.

G1: IPCA sobe 0,23% em maio, puxado por planos de saúde e bem abaixo das expectativas
Veja: Pressão sobre BC aumenta com IPCA e tensão com Lula por queda dos juros
InfoMoney: IPCA desacelera para 0,23% em maio e inflação chega a 3,94% em 12 meses, abaixo do esperado

3. OECD increases GDP projection in 2023 to 1.7%

The Organization for Economic Co-operation and Development (OECD) revised its projection upward for Brazilian Gross Domestic Product (GDP) in 2023. The new estimate projects 1.7% growth for the current year, compared to its estimate of 1% growth just three months ago. The growth prediction for 2024 was 1.1% in March and is now at 1.2%.

The annual OECD global outlook report shows that Brazilian economic growth will still fall below the 2.7% global growth expected for 2023 and 2.9% for next year. Brazil’s growth is also below what is expected for countries including Mexico (2.6%), Turkey (3.5%), and Indonesia (4.7%).

Valor Econômico: OCDE eleva projeção do PIB do Brasil para 1,7% em 2023

4. Federal government announces measures to encourage car purchases

The federal government created a Provisional Measure (MP) to create a range of discounts for buying cars according to criteria such as economic and environmental sustainability and country of origin. The government measure represents a discount of between 1.6% and 11.6% according to current values and is valid for four months.

For consumers, this works out to discounts from R$2,000 to R$8,000 when buying a car, but automakers will use their own pricing, based on other discounts.

The government will offer the incentives until targets of R$500 million in car purchases, R$300 million in buses, and R$700 million in trucks are met. When these amounts are reached, even if that happens before the MP ends, the incentive will cease.

Agência Brasil: MP que dá desconto a carros populares é publicada
Folha: Montadoras refazem tabelas de preço; carro novo mais barato é anunciado por R$ 58.990
G1: Descontos do governo para carros populares vão de R$ 2 mil a R$ 8 mil; veja como calcular

5. Number of children in school drops after the pandemic, according to IBGE

The number of children between the ages of 4 and 5 years old enrolled in schools dropped from 92.7% in 2019 to 91.6% in 2022, according to the Continuous National Household Sample Survey (PNAD) conducted by IBGE.

This is the first time since 2017 that the number has fallen. With these results, the National Education Plan’s (PNE) goal of universalizing access to preschool, which should have been achieved in 2016, becomes even more distant.

Enrolling children of these ages in school is mandatory. However, schools being closed for long periods during the pandemic, challenges with remote education, and the delay in vaccination could have contributed to the number of parents who have removed their children from schools, even if only temporarily.

G1: Índice de crianças de 4 e 5 anos na escola cai após a pandemia, diz IBGE; meta de universalização fica distante